Carlstadt Blog

If there was one issue that put the kibosh on Steve Lonegan’s race for Governor, it was his Flat Tax plan.  Christie hammered Lonegan daily on the plan saying that, in effect, it would have raised taxes for most New Jerseyans. While a flat tax is the most just plan out there, even I had my misgivings about putting the plan into effect in NJ.  I just couldn’t put my finger on why during the campaign.

You see, our sales tax is a flat tax and no one seems to mind.  No one calls it an unfair burden on the poor (although lately it’s become a burden on all of us).  No one calls for a graduated sales tax.  Why is that?  Well, until recently, the sales tax has always been a low percentage tax.  A few cents on the dollar and, at least in this state, necessities aren’t even taxed.  People don’t mind sharing the burden if the burden isn’t too great.  Now think what would happen if the sales tax was raised to 25 or even 50% and extended to all purchases, even food items.  It really would be an unfair burden on the poor and a graduated sales tax would probably be called for.  It’s a ridiculous scenario and one that would never be allowed to happen to the sales tax.

But, this in effect is what has already happened to the state income tax.  The state spends so much money and taxes so heavily that the ridiculous scenario is operating in full swing.  A flat tax is a sensible plan that doesn’t work in the senseless economics of NJ.  Before the flat tax can work, NJ’s whole gone-nuts spending mentality has to change.

Think what would happen if New Jersey were instituting an income tax for the first time and based it on a flat rate.  The tax implemented would have to be very low to keep it from hurting the poor.  And it would always remain low for the same reason.  The tax could never become an engine for runaway spending because any spending would lead to an increase in the tax rate which would hit everyone equally.  On the other hand, a graduated income tax drives spending increases because the increases can always be passed onto those paying in the higher brackets ––at least for a little while, as were seeing now in Jersey.   The whole idea that you can fund your state government by passing the financial burden onto people making more money than you is fundamentally flawed, besides being basically unfair.  In a free country, people with money can just move somewhere else.  And this is just what we’re seeing in Jersey as businesses are leaving the state at a record rate.  Who does that leave to pay for our expensive government?  The very people the graduated income tax is supposed to protect.